The Maldives is to modernise its commercial laws in a bid to
attract sophisticated foreign investment outside the tourism
Most of the Maldives commercial laws were passed in
the late 1980s and early 1990s amidst an influx of foreign
investment. Subsequent amendments have often been stymied by
the Majlis (Parliament), but despite
recent political unrest in the country, the government has
reiterated its commitment to encouraging investment.
A new Arbitration Bill was debated in Parliament on April
9. Subject to revision, it is expected to incorporate
United Nations Commission on International Trade Law (UNCITRAL)
rules. It is a direct result of the
Maldives recent accedence to the New York Convention to
enforce awards from international arbitration.
According to Mohamed Shahdy Anwar, senior partner at Suood
Anwar & Co, the bill outlines the framework of a body in
the Maldives similar to the Singapore International Arbitration
Centre (SIAC) and the Kuala Lumpur International Arbitration
Practitioners say that the Arbitration Bill has broad
support and will encourage the arrival of investors who have
been reluctant to resolve disputes in Maldivian courts.
Additionally, the countrys 1996
Companies Act will undergo broad revisions. The Act
currently lacks provisions for public disclosure, terms and
conditions for company directors and establishing a company
with only one shareholder or director. A draft was debated in
Parliament last October, and a revised version will return
sometime this year.
Lawyers hope that the amendments will also establish a clearer
means to register foreign investment companies, currently
regulated by the 1979 Foreign Investment Act.
Mohamed Fizan, a partner at Shah, Hussain & Co
said this iteration of the Act has been a major complaint for
lawyers and investors. It requires foreign companies to
register with the Ministry of Trade and Industries, long
considered an unpredictable regulatory body. A proposed
solution is for foreign companies to register with the relevant
sectors government authority.
The countrys tax laws, introduced last year, are also
subject to changes. The proposed Corporate Tax Act and the
Personal Income Tax Act, if passed, will repeal and replace the
2011 Business Profit Tax Act, the first to levy taxes on
Further legislation that will be debated by Parliament this
year includes the Trust Act to provide for the establishment
and regulation of trusts, and the Central Securities Depository
Bill to further expand the Maldives Stock Exchange.